Controlling food sales

Controlling Food and Beverage Sales BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage SalesWednesday, October 19, 2011 Slide 1 / 37 Rajendra Nabar

Recap of the previous session• What are the 4 quadrants in the menu engineering graph?• What action is recommended on Puzzles.• How are Plow horses repositioned.• Menu Mix is equivalent to popularity what index is taken to measure it.• How is the average contribution margin derived in Menu engineering. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 2 / 37 Rajendra Nabar

KCM of the Session1. List and explain the three goals of sales control.2. List and describe eight determinants of customer restaurant selection.3. Describe the two principal means of maximizing profits.4. Explain the three most common methods of establishing menu prices.5. Describe the two principal means of selling products effectively in a restaurant. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 3 / 37 Rajendra Nabar

Scope• Goals of Controlling food sales.• Optimizing # of customers.• Maximization of profit.• Controlling of Revenue. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 4 / 37 Rajendra Nabar

Goals of Sales Control• The main goals of sales control are as follows:• Earlier the main goals were limited to maximization of profits but currently have changed due to trend: BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 5 / 37 Rajendra Nabar

Three principal goals of sales control1. Optimizing the number of customers.2. Maximizing profit.3. Controlling revenue. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 6 / 37 Rajendra Nabar

Optimizing the number of customers• The following factors are responsible for a repeat customer experience for restaurant:1. Location2. Menu item differentiation3. Price acceptability4. Lighting and décor5. Portion sizes6. Product quality7. Service standards8. Menu diversity BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 7 / 37 Rajendra Nabar

Location Figure 8.1 BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage SalesWednesday, October 19, 2011 Slide 8 / 37 Rajendra Nabar

Menu Item differentiation1. Homogeneous: Most FMCG’s, and retail level products fall into this category. There is similarity between the a range of products.2. Differentiated: Are perceived as unique clothing, designer wear, where the segment of the population is able to afford it. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 9 / 37 Rajendra Nabar

Menu Item differentiationCharacteristics of a Homogenous menu:1. Items repeating in restaurants with more or less similar price line.2. Augmenting the products changing shape and repositioning will help in changing to differentiated.3. Such a stand should be adopted by restaurant D in making the menu unique. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 10 / 37 Rajendra Nabar

Menu Item differentiation• Using Signature Items1. Waldorf Salad.2. Lobster Newberg.3. Caesar Salad.4. Sarah potatoes.5. Peach pudding à la Cleveland6. Marshall Ney. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 11 / 37 Rajendra Nabar

Price Acceptability• As shown in Figure 8.1 Restaurant A will have the highest sales volume unless Restaurant C lowers its prices significantly.• The relationship between Sales price and sales volume which is also known as Price sensitive.• Making of a homogenous menu from the price perspective. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 12 / 37 Rajendra Nabar

Price Acceptability• An example of the is the price of an Hamburger in National chains and table service restaurants.• Price acceptability is a customer judgment of the value for money for the product and services offered by the establishment.• For a food service operator it’s a challenge to establish menu prices targeted to the segment. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 13 / 37 Rajendra Nabar

Lighting and Decor• This is the creation of the designer. The lighting corresponds and compliments the décor.• Family groups prefer informal, light, bright and cheerful interiors.• Nuclear families and couples prefer dim and diffused lighting:• The lighting at the façade is the biggest marketing tool. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 14 / 37 Rajendra Nabar

Portion Sizes• The younger generation prefers larger portion sizes:• Some older people prefer dry and smaller portions:• Certain communities will eat very little but want a spread:• A standard portion size is the one that appeals all. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 15 / 37 Rajendra Nabar

Product quality• Preference of fresh food rather than frozen:• Bodies like the AAA, Mobil travel guide.• Zagat survey does not use professional food critics like Michelin but direct ratings from customers. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 16 / 37 Rajendra Nabar

AAA Ratings# 1 Diamond - Affordable, good, casual dining# 2 Diamonds - Informal, family oriented dining# 3 Diamonds - Creative, upscale, adult-oriented dining# 4 Diamonds - Luxurious fine dining, excellent service# 5 Diamonds - World-class dining experience, impeccable service BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 17 / 37 Rajendra Nabar

Mobil Star Ratings#One Star - Culinary specialty, local flair, considered in this category.# Two Star - Freshly prepared food, cordial, efficient, and clean, often showcase a distinct cuisine.# Three Star - Skillfully prepared food, specific style, professional service, décor of excellent quality.# Four Star - Exceptional, creative, complex, refined personal service.# Five Star - Elite, flawless, exceptional food, superlative service, elegant décor, and exquisite presentations. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 18 / 37 Rajendra Nabar

Service Standards• Levels of service are defined in all types of food service establishments.• Diners look at service swift, Unobtrusive and an art form.• Diners are segmented they walk into a restaurant for various reasons.• Time, Convenience, curiosity, tip conscious, BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 19 / 37 Rajendra Nabar

Menu Diversity• A limited menu can have a negative impact on the repeat customer.• A menu with a wider choice between the entrée’s and a range of alternative accompaniments emerges successful.• The equipment in the kitchen also affects.• Culinary abilities of the staff.• Cost considerations and leftovers. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 20 / 37 Rajendra Nabar

Maximizing profits MAXIMIZING PROFIT• There are two principal means for maximizing profit:1. Pricing products properly.2. Selling those products effectively. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 21 / 37 Rajendra Nabar

Pricing products properly• Cost is one of the determinants of Pricing.• The desire to maximize sales.a. Differentiation or Homogenization.b. Price sensitivity.c. Changing conditions.• Matching competitors prices.• Calculating Prices from costs and cost percents.• Adding desired contribution margins to portions. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 22 / 37 Rajendra Nabar

Matching Competitors Prices• Follow the leader system and imitative approach.• This is an adoption of the subjective pricing methodology.• QSR’s are very much alike on the product form décor is what makes the different.• If the menu prices are low so the CM’s are even lower therefore greater # of customers are required to fill up and hence the level of profit is grossly affected BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 23 / 37 Rajendra Nabar

Calculating Prices from Costs and Cost Percents• We have studied the different approaches in pricing methodologies.• The most common are the simple ingredient mark up methods using multipliers.• Mainly the ingredient mark up.• Prime ingredient mark up.• Ingredients with accompaniments costs mark up methods. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 24 / 37 Rajendra Nabar

Using the Contribution Margin• Adding contribution margins to portion costs.• Determine the average contribution margin.• Then add the average contribution margin to the Standard portion cost. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 25 / 37 Rajendra Nabar

Selling Products effectively• Essentially, a restaurant has two principal means available for selling products effectively:1. The menu2. The sales techniques used by the staff BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 26 / 37 Rajendra Nabar

The Menu• The primary sales tool.1. Layout and design.2. Variety.3. Item arrangement, location & Positioning4. Descriptive language.5. Kitchen Personnel and equipment. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 27 / 37 Rajendra Nabar

The Sales techniques• The servers role is to influence the customers decision.• Daily briefing to instill the menu in the minds of the servers.• It helps in customers to make realistic decisions.• Suggestive selling can eliminate slow moving items and can also combat a short supply of an item in the kitchen BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 28 / 37 Rajendra Nabar

Controlling revenue• The goal of revenue control:1. To minimize the possibilities of errors in recording of sales revenue.2. Establish standards and procedure for revenue control thru the 4 stage process. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 29 / 37 Rajendra Nabar

Establish Standards for Revenue Control• The three main standards for achieving the goal of revenue in appropriate revenue to the establishment:1. Documenting all sales.2. Pricing all sales correctly.3. Verifying that all sales are recorded. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 30 / 37 Rajendra Nabar

Documenting all sales (Manual Systems) • Attributes of guest check record:1. Help servers remember the specifics of guest’s orders.2. Provide a written food order to kitchen personnel.3. Give itemized bill to guests.4. Prove the accuracy of cashiers work.5. Verify the accuracy of prices charged.6. Provide the record required for tax purposes. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 31 / 37 Rajendra Nabar

Standardized Systems using Manual Means1. Using numbered checks.2. Pricing all sales correctly.3. Recording revenue. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 32 / 37 Rajendra Nabar

Use of numbered Checks BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage SalesWednesday, October 19, 2011 Slide 33 / 37 Rajendra Nabar

Pricing sales correctly (Manual Systems)• Errors in billing.• Using the Dupe or duplicate system.• Adding the right tax.• Putting the right number consumed. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 34 / 37 Rajendra Nabar

Recording Revenue (Manual Systems)• Use of barkers control sheet.• Use of the cashiers control sheet.• Upgrade the equipment like cash registers.• In the electronic POS see to it that tables are closed.• Document the information in the sheet as on the next page. BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales Wednesday, October 19, 2011 Slide 35 / 37 Rajendra Nabar

Questions  Comments BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage SalesWednesday, October 19, 2011 Slide 37 / 37 Rajendra Nabar

Controlling food sales

by Rajendra Nabar

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